Irish Central Banker Lays Down the Law at Bitcoin Gathering

Many bitcoin backers trekked to Dublin this week hoping that a senior central banker scheduled to speak at a bitcoin conference

Reuters

there would help bestow a measure of legitimacy to the virtual currency.

Not so fast.

Instead, Gareth Murphy, director of markets supervision at the Central Bank of Ireland, essentially the number three man at the institution, had another message to deliver. Addressing the Bitcoin Finance Conference at the Royal Dublin Society, Murphy described bitcoin and traditional finance as “two worlds colliding.”

And Murphy made clear which world he thought was going to come out intact.

“Should anyone else be allowed to create money other than a central bank? There is an issue of sovereignty at stake,” he told attendees. In an interview after the speech, Murphy said he came to the conference to tell the bitcoin industry that, in the perspective of Ireland’s central bank, things were moving very fast. To the extent that the bitcoin industry was seeking to engage with the wider economy, he said, “they shouldn’t be surprised if Moses came down from the mountain with the law.”

Bitcoin is a decentralized, unregulated virtual currency now used by some 100,000 merchants worldwide. It is not legal tender in most countries.

“The more (bitcoin) engages with the real-world economy the more it raises questions of regulations and legislation,” Murphy said.

In his presentation, Murphy urged the industry to work actively to address the concerns of financial authorities like his. “Which side of the regulatory tent do you want to be on?” he asked the room of about 200 bitcoin businesspeople, many of whom run firms that exchange bitcoin or allow people to pay merchants in bitcoin.

Murphy acknowledged that technology, virtual currencies and innovations in financial services are going to have an impact on the way financial services develop in the future.

“There will be some initiatives taken by policymakers in this space in due course,” he said, adding that it was up to the authorities to maintain the stability of the “existing legal tender economy.”

“Ultimately the people have decided via their legislators to empower central banks and various financial authorities to maintain stability, whether it’s price stability and the integrity of the financial system,” he said. “That is the job we’ve been given.”